Safe Harbor Contributions?

[Jilliandiz]

Plan is terminating in 2005. Therefore, there will be 2005 SH contribution owed to everyone eligible. How does this get paid?? Do they have to fund it before the participants take their distribution, or can they just fund it by the time their corporate taxes are due 9/15/06 and cut checks directly to the individuals since their accounts would already be distributed from the plan?

I have no idea how to handle this?

[Guest Pensions in Paradise]

I would wait until after the employer funds the contribution to process distributions. You can process distributions before the final contribution is made, but it may create headaches for you. Better to wait until everythings funded.

Also, is the plan a safe harbor match or safe harbor nonelective? If safe harbor nonelective, keep in mind that since the plan has terminated midyear, you cannot rely on the safe harbor and must perform the ADP test for 2005.

[JanetM]

You may also have an issue with recordkeeper/trustee/custodian. Why should they keep the accounts active with zero balances after first distribution while you putter around and wait so long to make final contribution.

They may charge you big bucks for this.

Take special note of Pensions comment. Can you pass tests?

[Jilliandiz]

Unfortunately they will probably fail testing slightly, but they insist on terminating the plan regardless. It is a SH Non-elective contribution.

Thanks for your help!